Corruption, poor governance and inflation = chaos

Troubled Currencies: Exchange Rates and Inflation
.		Country	Date	Black-Market Exchange Rate*	Official Exchange Rate*	Implied Annual Inflation Rate	Current Official Inflation Rate
.		Argentina	7/9/2013	7.98	5.42	24.60%	10.34%
.		Iran	7/9/2013	33,100.00	24,777.00	73.70%	31.00%
.		North Korea	6/25/2013	8,043.00	131.70	78.64%	N/A
.		Syria	7/9/2013	295.00	131.17	336.50%	36.43%
.		Venezuela	7/9/2013	31.59	6.29	240.10%	35.24%
.		Source: aliqtisadi.com, dailynk.com, dolarblue.net, gate.ahram.org.eg, dollar.nu, eranico.com, Federal Reserve Economic Database, various news sources, and calculations by Prof. Steve H. Hanke, The Johns Hopkins University.
.		*Local Currency per USD

 Professor Steve Hanke,  Johns Hopkins University and Senior Fellow at the Cato Institute,  has been working on a project called “Troubled Currencies”, which he defines as very unstable and associated with high rates of inflation. In the countries having those currencies the statistics are often adulterated in order to hide the true extent of their economic problems.  Professor Hanke has selected the following countries for his work:  Argentina, Iran, North Korea, Syria and Venezuela (see table above).  In the case of Venezuela the table shows an official rate of exchange of Bs. 6.29 to the dollar while the parallel rate is today Bs. 31.59 to the dollar. According to Professor Hanke this implies that the Venezuelan annual inflation rate is 240.1 percent rather than the official rate of inflation of 35.24 percent estimated by the government. Only Syria, a country immersed in a cruel and generalized civil war, has a higher rate of inflation than Venezuela.

Although the emphasis of the study is economic one cannot resist the temptation to link the chaotic economic conditions of these countries to the nature of their political regimes and the quality of their governance. All exhibit authoritarian styles of a militaristic (North Korea, Venezuela, Syria), religious (North Korea) or populist nature (Argentina, Venezuela) and share generally high levels of corruption. The Corruption Index of Transparency International for 2012  places countries with troubled currencies as follows, in the list of 175 countries:

Argentina    102

Iran               133

Syria              144

Venezuela    165

North Korea 174